[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
THE PRESIDENT'S FISCAL YEAR 2015 BUDGET
PROPOSAL FOR THE POSTAL SERVICE
=======================================================================
HEARING
before the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
APRIL 8, 2014
__________
Serial No. 113-137
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
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89-896 WASHINGTON : 2014
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
DARRELL E. ISSA, California, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, JR., Tennessee CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina ELEANOR HOLMES NORTON, District of
JIM JORDAN, Ohio Columbia
JASON CHAFFETZ, Utah JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan JIM COOPER, Tennessee
PAUL A. GOSAR, Arizona GERALD E. CONNOLLY, Virginia
PATRICK MEEHAN, Pennsylvania JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee MATTHEW A. CARTWRIGHT,
TREY GOWDY, South Carolina Pennsylvania
BLAKE FARENTHOLD, Texas TAMMY DUCKWORTH, Illinois
DOC HASTINGS, Washington ROBIN L. KELLY, Illinois
CYNTHIA M. LUMMIS, Wyoming DANNY K. DAVIS, Illinois
ROB WOODALL, Georgia PETER WELCH, Vermont
THOMAS MASSIE, Kentucky TONY CARDENAS, California
DOUG COLLINS, Georgia STEVEN A. HORSFORD, Nevada
MARK MEADOWS, North Carolina MICHELLE LUJAN GRISHAM, New Mexico
KERRY L. BENTIVOLIO, Michigan Vacancy
RON DeSANTIS, Florida
Lawrence J. Brady, Staff Director
John D. Cuaderes, Deputy Staff Director
Stephen Castor, General Counsel
Linda A. Good, Chief Clerk
David Rapallo, Minority Staff Director
C O N T E N T S
----------
Page
Hearing held on April 8, 2014.................................... 1
WITNESSES
Mr. Brian Deese, Deputy Director, Office of Management and Budget
Oral Statement............................................... 8
Written Statement............................................ 10
THE PRESIDENT'S FISCAL YEAR 2015 BUDGET PROPOSAL FOR THE POSTAL SERVICE
----------
Tuesday, April 8, 2014,
House of Representatives,
Committee on Oversight and Government Reform,
Washington, D.C.
The committee met, pursuant to notice, at 10:00 a.m. in
room 2154, Rayburn House Office Building, the Honorable Darrell
Issa [chairman of the committee], presiding.
Present: Representatives Issa, Mica, Turner, Walberg.
Lankford, Amash, DesJarlais, Gowdy, Farenthold, Woodall,
Massie, Meadows, Cummings, Maloney, Norton, Tierney, Lynch,
Connolly, Duckworth, Kelly, Welch, and Grisham.
Staff Present: Ali Ahmad, Majority Professional Staff
Member; Molly Boyl, Majority Deputy General Counsel and
Parliamentarian; Lawrence J. Brady, Majority Staff Director;
John Cuaderes, Majority Deputy Staff Director; Adam P. Fromm,
Majority Director of Member Services and Committee Operations;
Linda Good, Majority Chief Clerk; Mark D. Marin, Majority
Deputy Staff Director for Oversight; Jeffrey Post; Majority
Senior Professional Staff Member; Laura Rush, Majority Deputy
Chief Clerk; Sarah Vance, Majority Assistant Clerk; Peter
Warren, Majority Legislative Policy Director; Rebecca Watkins,
Majority Communications Director; Meghan Berroya, Minority
Counsel; Kevin Corbin, Minority Professional Staff Member; Adam
Koshkin, Minority Research Assistant; Julia Krieger, Minority
New Media Press Secretary; Elisa LaNier, Minority Director of
Operations; Lucinda Lessley, Minority Policy Director; Juan
McCullum, Minority Clerk; and Mark Stephenson, Minority
Director of Legislation.
Chairman Issa. The committee will come to order.
The Oversight Committee exists to secure two fundamental
principles. First, Americans have the right to know that the
money Washington takes from them is well spent. Second,
Americans deserve an efficient and effective government that
works for them.
Our duty on the Oversight and Government Reform Committee
is to protect these rights. Our solemn responsibility is to
hold government accountable to taxpayers because taxpayers have
a right to know what they will get from their government.
Our job is to work tirelessly in partnership with citizen
watchdogs to deliver the facts to the American people and bring
genuine reform to the Federal bureaucracy. This is our mission
statement.
As I look around the room, I feel it is fairly safe to say
everyone here supports the Postal Service. The real question is
not whether but how to best reform postal delivery in order to
bring fiscal stability to the Post Office.
In two Congresses, the committee has led on postal reform,
comprehensive reform that, from CBO, scoring would bring
financial stability to the Post Office and, in fact, end the
bleeding red ink.
I still firmly believe the current bill, H.R. 2748, would
be the best path to postal reform and to save the Post Office.
H.R. 2748 will make difficult but common sense reforms that
enable a troubled agency to right side itself. Any delay in
necessary cost cutting reforms will only result in greater
debt, greater burden that will limit flexibility for the Postal
Service in the years to come.
You can never glean the intent of colleagues to your left
or right from this position. What you do know there has been a
reluctance to make the reforms that need to be made. These are
bipartisan. It seems that any reform that would reduce the size
of the workforce, even through attrition, is opposed by my
democratic colleagues.
In the Senate, there seems to be a consistent pattern that
postal reform is necessary along as it closes no post offices
and no processing centers anywhere in the State of each and
every Senator. This challenge is created by the necessary and,
if you will, understandable legacy of the Post Office.
This is a legacy that goes back to my youth in which the
Post Office delivered seven days a week, twice a day on many
days, and ultimately we relied on first class mail for
virtually every business transaction. I might note that in my
youth, the Postal Service was smaller than it is today and rose
from the 1960s through today and has fallen only over the last
decade as there has been a precipitous drop in first class mail
and even in other mail.
There is a bright future for the Post Office. Package
delivery is likely to continue as e-commerce becomes the
standard and the norm in greater amounts, but it brings a
challenge and a challenge that I believe today we can discuss
in light of the President's fiscal year 2015 budget proposal,
which includes many of but not all of the most necessary
changes.
One of them, which will be discussed today, will be ending
a very light Saturday delivery, something that is a legacy as
was Sunday delivery of the past.
Buried within the budget, I note without a score, that, in
fact, the Administration recognizes that door delivery ceased
in 1974 for further expansion needs to contract--two out of
three homes in America do not receive delivery at the door
while the cost of less than one out of three homes receiving
delivery through a chute, or the door or the stoop in fact
costs $6.5 billion in excess labor to the Post Office every
year.
Recently, I visited a home here in Washington, D.C. in a
suburban area of D.C., with large lawns and more than 30 steps
leading to the front door. Those steps were uphill from the
streets in which virtually all the residents parked on the
street, and few had garages. It reminded me of the fact that
these homes built in the 1940's, if they were built today,
would secure mailboxes or conventional mailboxes at their door.
Yet the Post Office has done absolutely nothing to alleviate a
postal worker walking up 30 steps times 30 homes every day.
As you can imagine, these steps, this past winter were snow
and ice filled day after day after day, an unnecessary risk to
the postal delivery person and quite frankly, a complete waste
of labor.
Although that is not an element and it may not be a part of
any compromise, I have continued to try to educate this
committee that cluster boxes located in neighborhoods like that
would be easy to install, more efficient for the Post Office,
but most importantly, since the future of the Post Office is
brightest in delivery of small packages, the ability to lock a
small package so it does not disappear or become damaged on
that stoop in neighborhoods like the one I visited clearly
would be beneficial to the consumer and ultimately beneficial
to the Post Office's product quality delivery.
I could dwell on the many items on which we have come up
short in the past. I choose not to. Today, we have a
representative of the Office of Management and Budget on behalf
of the President's proposal which includes a number of
proposals postal labor unions have asked for and a few
proposals that the Administration and I agree on that come from
our side of the aisle.
It is my goal to hear out in this hearing today our witness
and to embrace, to the greatest extent possible, the entire
proposal from the Administration. I would hope through that
embracing we could get a vote here on a bipartisan basis on the
House floor and get into conference where we could, in fact,
make the President's budget proposal a reality.
With that, I yield to the Ranking Member.
Mr. Cummings. Thank you very much, Mr. Chairman. Thank you
for convening this hearing today to enable us to review the
President's fiscal year 2015 budget proposal for the Postal
Service.
The Postal Service remains the link that holds all corners
of our Nation together and delivers mail to more than 150
million addresses nationwide and maintains a network of
approximately 32,000 post offices.
However, as we well know, declining mail volume has reduced
the Postal Service's revenue, even as it continues to be
statutorily required to make multibillion dollar annual
payments into a fund to cover future retiree health benefits, a
requirement no other agency has. The Postal Service has now
defaulted on nearly $17 billion in retiree health benefit
payments and it will default on the payments due at the end of
September of this year.
The Postal Service's cash position has improved, however,
due largely to increased parcel and package volume which grew
by six percent during fiscal years 2012 and 2013. Parcels and
packages now account for almost one-fifth of the Postal
Service's revenue.
The President's budget proposes several operational reforms
that the Administration believes would provide significant
relief to the Postal Service and place it on firmer financial
footing over the long term. Many of these proposals echo
provisions contained in legislation I and Congressman Lynch
have previously offered.
For example, H.R. 2690, which I introduced last year, would
recalculate the Postal Service's liability to the Federal
Employee Retiree System on the basis of demographic assumptions
that better reflect the unique characteristics of the Postal
Service's workforce. The President's budget endorses this
proposal.
The President's budget also would return to the Postal
Service the overpayment it has made into the retirement system.
The President's budget also supports the restructuring of the
Postal Service's payments into the Retiree Health Benefits
Fund. The Administration indicates that the plan it has offered
would provide $9 billion in cost savings. The President's
budget would make permanent the exigent rate increase recently
approved by the Postal Regulatory Commission.
The Postal Service already has the authority to convert
addresses receiving door delivery to curbside or centralized
delivery. I believe the Postal Service has continued to make
such conversions where they make sense and where neighborhoods
support this change. I agree with the Chairman that such moves
would help hopefully to save our postal workers from injuries
and difficult circumstances.
New addresses should continue to be required to receive
curbside or centralized delivery. Ultimately I believe the
delivery frequency should be considered in the context of
comprehensive postal reform legislation. Given the concerns of
our colleagues on both sides of the aisle, any consideration of
changes to the frequency of delivery should be the subject of a
robust debate involving all stakeholders.
As I close, I commend the Administration for supporting
comprehensive postal reform and offering a thoughtful package
of policy proposals for our consideration. As we proceed, I
hope we will focus on measures we can all agree on rather than
measures that drive us apart.
It has been more than eight months since the committee
marked up the Chairman's postal reform measure. Since then, the
Senate Homeland Security and Government Affairs Committee
advanced a bipartisan reform bill. Although I don't agree with
everything in the Senate's bill, it offers a bipartisan
starting point from which we could craft a measure that would
ensure the Postal Service's position to succeed while serving
the changing needs of its customers.
With that, Mr. Chairman, I yield back.
Chairman Issa. I thank the gentleman.
We will now go to the subcommittee chairman from Texas, Mr.
Farenthold.
Mr. Farenthold. Thank you, Mr. Chairman.
I am really glad we are having this hearing today. I think
we will find today that the President and what we passed out of
this committee eight months ago is very close. We are not that
far off. We are in agreement on most of the major issues. We
will need to take an overall look.
While the Internet has been a boon for the Nation and the
global economy, it has been a mixed blessing for the Postal
Service. Package volume is growing rapidly thanks to e-commerce
but that impressive growth has not been nearly enough to offset
the decline in letters. Americans are rapidly changing how they
communicate with one another and how they pay their bills. The
Postal Service is struggling to adapt.
This does not mean that we are not living in a non-postal
world. The Postal Service is a vital link in our economy,
connecting even the most remote parts of this country. That is
why postal reform is so important. We cannot just move bits and
bites around, we need to be moving atoms around. It is
absolutely critical.
As the President stated in the budget, there can be no
doubt the Postal Service is in need of reform. Today the
troubled agency stands in default to the Treasury for $16.7
billion. Without substantial changes in current law, the agency
now admits it will not be able to address its more than; $100
billion in unfunded obligations over the long term.
Last July, this committee passed the Postal Reform Act of
2013. Unfortunately we did not get the bipartisan support we
were looking for. I thought we worked pretty strongly with the
minority but we were not able to get a bipartisan bill.
Hopefully, finding the pieces we agree on from the President's
budget today will allow us to get the bipartisan support that
we need.
I do want to take a second to correct the Ranking Member. I
guess he has not reviewed the transcript from our subcommittee
hearing of a couple weeks ago. The Postal Service is, in fact,
not the only government agency required to accrue for future
health benefits. The Department of Defense is also required to
accrue for Tri-Care for Life so that management within the
Pentagon would be aware of the cost of current day decisions on
long term financial interest.
Getting back to the other issues in postal reform, where
the savings can be, the President agrees that door to door
delivery is too expensive. Our legislation came up with a
solution that would continue door to door service for the
elderly and disabled and we could come up with a way to pay for
that if you wanted to do it. You pay a fee and you continue to
get the mail.
There is no question it is more cost effective to do what
we are doing in new subdivisions now, cluster boxes or curbside
mail or typical boxes where the postal worker does not need to
get out of his or her car to deliver those. It is safer and
faster.
I am also glad to see the President's continued support for
five day delivery of mail, a change supported by the American
people. I cannot believe we are still debating this. We came up
with a great compromise where packages would be delivered on
Saturday so we could get around the problem of people needing
their medications delivered and still save lots of money.
Unfortunately, the Postal Service was moving that way and
they bowed to political pressure and backed off on it. That is
not good. My fear as a government watchdog, a taxpayer and as a
postal customer is without reform, the American people are
going to be left footing the bill for taxpayer bail out of the
Postal Service. That is the last thing we need right now.
Maybe it is a policy debate we will need to have, but I
think you will find consensus on both sides of the aisle.
Within these tight budgetary times, we just don't need to be
bailing out the Postal Service.
As the chairman of the Subcommittee on Federal Workforce,
U.S. Postal Service and Census, I am committed to continuing to
work with the Postal Service and members of this committee to
bring the necessary reforms needed to bring the Postal Service
into the 21st Century. I truly believe it is the smart way for
the Postal Service to lower its costs and improve its service.
I hope we can bring them to light today and find a way we
can work with the President, members of the other Party, the
Postal Service, their customers and all stakeholders which
basically includes all American people to find a solution that
works to give us a 21st Century Postal Service that can carry
its own financial weight, can be a boon to our economy, get
those atoms delivered on time, give us the quality of service
we need and deserve nationwide at an affordable cost.
I yield back.
Chairman Issa. I thank the gentleman.
We now recognize the Ranking Member of the Subcommittee,
Mr. Lynch.
Mr. Lynch. Thank you, Mr. Chairman and the Ranking Member.
Thank you for holding this hearing to examine the President's
fiscal year 2015 budget proposal for the United States Postal
Service.
I would also like to welcome Mr. Deese and thank him for
his willingness to help the committee with its work.
While I don't agree with specific parts of the President's
postal budget, especially with respect to the move to five day
delivery, I do recognize it as a thoughtful and meaningful
attempt to deal with our problem.
According to its most recent quarterly financial report,
the Postal Service ended fiscal year 2013 with a net loss of $5
billion. The agency also endured a net loss of $354 million for
the first quarter of fiscal year 2014, making it the 19th out
of the last 21 quarters that it has sustained a loss. Moreover,
the Postal Service has indicated that it will again default on
its annual payments to pre-fund its future retiree health
benefits when $5.7 billion becomes overdue after September 30.
It is against this troubling financial backdrop that the
President has submitted the fiscal year 2015 budget that
contains a number of proposals to address the serious fiscal
challenges facing the Postal Service.
In examining the various recommendations issued by the
Administration and as we continue to undertake the critical
task of reforming the Postal Service, it is imperative that we
bear in mind that the agency has recently demonstrated an
ability to grow revenue while operating under very difficult
financial conditions.
According to Postal Service testimony before our committee
last month, fiscal year 2013 witnessed the first revenue growth
for the agency since 2008, including a $923 million increase in
package business, about an eight percent increase, and a $487
million increase in standard mail, about three per cent of
volume.
Executive Vice President Jeff Williamson noted that
``Growth in our package business was fueled by our priority
mail simplification and enhancement efforts. We also formed a
strategic partnership with Amazon to test Sunday package
delivery in select markets. We are exploring similar
partnerships with other companies.''
This indicates that the path to greater financial viability
for the Postal Service does not lie in service reduction, the
degradation of our existing mail network or arbitrary workforce
cuts. Rather, we have seen that the Postal Service can
experience profitability when it capitalizes on distinct
business features that have long set the agency apart from its
competitors.
I am referring to an extensive and unparalleled mail
network and a dedicated workforce that is ready, willing and
able to provide personalized service to the American people six
days a week, and now even on Sundays. That is what the customer
wants.
Meaningful postal reform must not degrade the exceptional
service standards that have come to define the Postal Service,
but instead afford the agency the operational and financial
flexibility to build upon what it already does best. That is
why I remain steadfast in my opposition to a transition to five
day mail delivery, although I concede that where appropriate,
it may be possible in some rural and suburban areas to convert
from door delivery to curbside deliveries, again where
appropriate.
Rather, I think we should focus on commonsense reform that
will only strengthen the Postal Service and I am encouraged
that the President has again recommended that Congress to
require the Office of Personnel Management to return to the
Postal Service the surplus amount that it has overpaid for its
share of federal employee retirement costs.
As noted by the Administration, the Office of Personnel
Management should be required to calculate the surplus using an
actuarial formula based on the specific demographics of postal
employees.
I want to use my last minute to talk about the statement
that the Ranking Member may have been wrong in singling out the
Postal Service as the only agency required to pre-fund its
employee health benefits going forward. The chairman of the
subcommittee, a great friend of mine, indicates that DOD also
is required to pre-fund their health benefits in advance.
However, I want to point out a major distinction that
clearly sets this apart. The Department of Defense provides
advanced payment of their health care benefits for retirees
because Congress issues an appropriation, we give them the
money to do it, each and every year. That is why they provide
their health benefits in advance.
We do not provide an appropriation for the Postal Service.
We let them sell stamps. That is quite different than the
suggestion the Ranking Member was off base on that and is
completely wrong. DOD gets an appropriation from the House and
Senate and that is why they pay for their health benefits in
advance.
With that, Mr. Chairman, I appreciate your indulgence and I
yield back the balance of my time.
Chairman Issa. Never an indulgence.
We now welcome our witness, the Honorable Brian Deese,
Deputy Director, Office of Management and Budget. Please rise,
pursuant to committee rules, to take the oath.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth?
[Witness responds in the affirmative.]
Since you are the main show today, we will not gavel you at
five minutes. Your entire opening statement is placed in the
record without objection and you are free to use more or less
the five minutes in any way you like.
You are recognized.
STATEMENT OF BRIAN DEESE, DEPUTY DIRECTOR, OFFICE OF MANAGEMENT
AND BUDGET
Mr. Deese. Chairman Issa, Ranking Member Cummings and
members of the committee, thank you for the opportunity to be
here today to discuss the President's proposal for reform of
the U.S. Postal Service.
The Administration recognizes the value of the Postal
Service to our Nation's commerce and communications and its
essential role in connecting America with the global economy.
We also recognize that for years, the Postal Service has ranked
among the most trusted federal agencies and that is because
they provide universal service to millions of Americans that is
both reliable and affordable.
Unfortunately, the great recession exacerbated financial
pressures the Postal Service has been facing for many years. In
recent years, the Postal Service has faced a significant
financial gap and large unfunded liabilities. Given these
challenges, the Administration believes there is both a need
and an opportunity for legislation to provide near term
financial relief and long term structural reform that would
help ensure the future viability of the Postal Service.
The proposals in the President's budget build on many of
the proposals and business reforms that the Postal Service has
been implementing in recent years. It focuses on four key
principles that I would like to briefly touch on today.
First, the proposal provides the Postal Service with
sufficient near term financial relief to avoid destabilizing
near term measures that could undermine the Postal Service's
core strengths. The Administration proposal would improve the
Post Service's near term cash position by more than $20 billion
over the next three years, providing time for key legislative
reforms and operating efficiencies to take effect.
Second, the proposal provides the Postal Service with
flexibility to adjust to a change demand environment. In
addition to the Postal Service's ongoing administrative
initiatives in this area, the Administration's proposal would
provide the Postal Service with market-based authorities to
realign its business and operational strategies.
Third, the proposal gives the Postal Service flexibility to
generate additional revenue as well. This would include the
authority to leverage its national network through new
partnerships with State and local government entities, as well
as expanding promising and profitable new lines of business.
Finally, the Administration's proposal would build on
rather than undermine the Postal Service's core strengths. The
Administration believes that the test for any comprehensive and
balanced reform proposal must be that we improve the Postal
Service's quality of service, including in rural America and
responsiveness of its product offerings to build on the trust
the Postal Service has with the American people.
The Administration is gratified by the serious work of
members of this committee, as well as in the Senate, to bring
forward ideas and approaches to addressing the Postal Service's
challenges and we look forward to working with Congress to
strengthen the Postal Service over the long term so that as I
said it can continue to provide the American people with
trusted, reliable and affordable service.
With that, I look forward to taking your questions on the
Administration's Postal Service proposal.
[Prepared statement of Mr. Deese follows:]
[GRAPHIC] [TIFF OMITTED]
Chairman Issa. Thank you.
I will recognize myself and without objection, the Chair is
authorized to declare recesses of the committee at any time.
First of all, looking at the President's budget, the CBO
has scored about $6.5 billion, if we were to convert the
remaining homes that have to the door, so-called chute,
delivery to the curb. However, in the President's budget, which
usually scores higher than the CBO score for a number of
reasons, you scored only $500 million in savings.
I note that it was a mandate on business while in fact no
mandate on the private sector. In other words, if you will,
residents would continue to be under the same 1974
encouragement to convert that has not led to conversion. Did
you get your $500 million all from a calculation of business
and if so, why would business be appropriate for a mandate in
almost all cases and no residential?
Mr. Deese. I appreciate the question. This is an important
component of the Administration's plan.
The difference in scoring assumptions does derive from
difference in the policy assumptions or the policy proposal
itself. As you note, the Administration's proposal would do a
couple things in this space.
The first is it would provide the Postal Service the
authority to move to cluster, curbside approaches with respect
to businesses and with respect to new residences.
Chairman Issa. I appreciate that except they already have
that authority. The question is you scored $500 million. Assume
CBO makes $250 million, about half of what you usually score,
out of $6.5 billion, if we were to do them all--by the way, I
am supportive. I think the Ranking Member has more and more
recognized and supported at least the idea that cluster boxes
were an asset and not a liability when they maintain your
packages in a secure and water resistant environment.
My question really was the mandate on business, which I
support, it seems like it would score at least that amount and
as a result, was there a calculation of any savings in
residential because in order to score a savings, you have to
beat the very small amount of residential reduction that is
going on. That was the specific question. Did you get it all
from business?
Mr. Deese. The scoring assumption assumes that the majority
of that savings comes from the conversion in the business space
with a small amount coming from residential conversions. We did
not include in the Administration's proposal a mandate or a
target in the residential space.
Chairman Issa. And why not? There has been a long history
of people being very happy when they got conversion to cluster
boxes and security and yet there has been very little of it
under the law that has been around since before most people in
this room's birth.
Mr. Deese. Our rationale in that context was that while we
agree there are opportunities for potential cost savings
without undermining and in fact potentially enhancing customer
service, that it is location dependent and situation dependent.
There are promising strategies that the Postal Service is
deploying but before mandating that on a wide scale at the
residential level, we would want to understand better.
Chairman Issa. Let me ask two quick questions before my
time expires. There probably will be a second round.
You did ask for five day. The Administration has had that
year after year after year. You are solidly in favor of that
and I presume have had many years of public comment since it
has been in the budget year after year. Is that correct?
Mr. Deese. The Administration's proposal includes the
authority for the Postal Service to move to five day delivery.
Chairman Issa. It scores an assumption they will do it.
Mr. Deese. It includes the assumption. The only thing I
would note there is that it is our belief that needs to be a
part of a comprehensive and balanced plan and that taken in
isolation, the move to five day delivery doesn't solve
anything.
Chairman Issa. We concur with that. Would you say the
President's proposal in the budget would be considered
comprehensive, in the President's opinion?
Mr. Deese. Yes, sir.
Chairman Issa. If we embrace the entire budget proposal,
that would, in fact, be comprehensive according to the
Administration?
Mr. Deese. We believe the proposal we put forward is
comprehensive and balanced.
Chairman Issa. Let me ask one last question related to the
cluster boxes. Would the Administration consider it reasonable
to go from what is stated which is the mandatory for business,
voluntary for residents to mandatory for business, mandatory
for residents which are substantially the same or identical to
existing post-1974 implementation?
In other words, recognize that if your residence was
designed substantially differently in the pre-1974 era right
here in Washington these row homes with the kind of unique
design that often does not easily facilitate a cluster box, but
if you live in a classic residential or rural area that simply
happens to have been built before 1974, would the
Administration be prepared to negotiate and agree if it is the
same as implementation post-1974 in large amounts, that pre-
1974 should be mandated--in other words, fairness between
somebody that has an identical community except this street was
built in 1975 and this one was built in 1972?
Mr. Deese. That is a specific proposal that we haven't
closely looked. We would be happy to do so. The broader policy
concern we have that we would want to better understand is
whether imposing a mandate in this context would create
untenable situations in particular locations. We would be happy
to look at that specific proposal.
Chairman Issa. I would appreciate that.
I will yield to the Ranking Member and give him the
additional time.
The reason I asked that is we consider, at some point, that
is essentially voluntary where not the same as millions of
Americans have now had for generations. If a home built in
1975--a goose or gander kind of thing--since 1975 somebody has
lived with it and it works, say a home on the same street but
further down it was built in the 1960s, why wouldn't you
convert it if it was substantially the same?
In the language that I proposed that we enter into
negotiation with the Administration would limit the mandate to
those in which it was substantially similar so there would be
no injustice but rather a bringing to justice what has
obviously worked in the last almost 50 years since the law must
already be considered to work if it is substantially identical
or there was some language that would be agreed to.
That would be what I would propose because I believe the
proposal of the Administration could be enhanced in scoring
substantially if we were to take those like residences and
bring them in a ten year period to identical, if you could take
that back.
I thank the Ranking Member for his indulgence and yield
seven minutes.
Mr. Cummings. Mr. Deese, on Wednesday, April 2, Budget
Committee Chairman Paul Ryan unveiled his fiscal year 2015
budget. Included in the Chairman's budget was a proposal
requiring postal employees to pay increased costs for health
and life insurance. The budget would also subject postal
employees to additional pension contribution rates that would
be applied to all federal employees. Currently, postal employee
contributions to health and life insurance is subject to
collective bargaining.
Has the Administration used the chairman's budget proposal
and if so, could you provide any feedback on that proposal?
Mr. Deese. We have not seen the full detail of the
chairman's budget proposal, so we have not reviewed the
specifics but would be happy to do so and get back to you.
Mr. Cummings. How soon can you get that to me?
Mr. Deese. I would be happy to work on it as quickly as we
can and get back to you shortly.
Mr. Cummings. One of my key priorities for postal reform is
the creation of a Chief Innovation Officer position in the
Postal Service. This individual would be tasked with leading
development of innovative postal and non-postal products and
services within the Postal Service to meet customer's changing
needs and generate additional revenues. Would the
Administration support creation of such a position?
Mr. Deese. That provision isn't specifically in the
Administration's plan but the objectives are quite consistent
with a number of the proposals in the plan in encouraging
innovation particularly in new product areas and creating
potential new revenue opportunities is something we do support.
That is something we would be open to and happy to work on with
you and others of the committee.
Mr. Cummings. One of the main operational reforms included
in the Administration's proposal for the Postal Service was
``allowing the Postal Service to leverage its resources by
increasing collaboration with State and local governments.'' Is
that right?
Mr. Deese. Yes, that is correct.
Mr. Cummings. How do you see them doing that?
Mr. Deese. I think the Postal Service's network across the
country is a vital asset and one that they have already found
some ways to take advantage of. For example, the processing of
passport applications in post offices has been something that
has enhanced customer service and customer satisfaction.
I think there are opportunities to build on that model and
provide opportunities to provide other licenses or other State
and local services and co-locate those in post offices that
would both create customer efficiencies and also potentially
create new revenue opportunities for the Postal Service as
well.
Mr. Cummings. Does the Administration believe that
innovation or collaboration with other entities could yield
additional revenue for the Postal Service? You talked about
passports. I don't know how much revenue is there. The question
becomes are some of these proposals revenue neutral?
You well know that when the Postal Service comes up with
new ideas a lot of times there are already entities in the
private sector that become concerned because they see it as
competing against what they are doing. In many instances, they
feel the Postal Service has an advantage over them because of
the very network you just talked about.
I am wondering if you considered the types of entities
other than passports, services that is?
Mr. Deese. Yes. I think you raise an important point. I
think it is an important question to ask for any potential
expansion into a new product or service line given the unique
position of the Postal Service, its monopoly position in some
business segments, whether or not we would inadvertently create
adverse competitive dynamics for private sector entities.
Our focus on collaborating with State and local entities
was principally driven by the fact that most all of those
services are governmental in nature, so they are not things
that would raise concerns about competitive dynamics.
With respect to expanding beyond that into other services,
that is a concern we share and one that we would look closely
to make sure if they were expanding, that they weren't tripping
up or undermining legitimate private sector business segments.
Mr. Cummings. Recently, the Postal Service Inspector
General released a white paper indicating that the Postal
Service could potentially generate billions of dollars in
additional revenue by providing non-bank financial services to
underserved communities. I am very familiar with underserved
communities because I am living in one and have been there for
32 years where there are no banks. Did you review the IG
report?
Mr. Deese. I am familiar with the IG report. Generally
speaking, the President is obviously very committed to that
policy goal of trying to expand access to banking services,
particularly in underserved areas where they are unable to
access or only able to access at extremely high costs and high
risk to individual consumers.
With respect to leveraging the postal network, that is not
something that is part of our proposal currently. I know there
are proposals out there and we have been looking at them. I
think that is a space we want to better understand the impact
both in terms of potential competitive dynamics but also in
terms of leveraging the strengths and assets of the Postal
Service.
We haven't incorporated that into the Administration's plan
but we want to learn more from some of the proposals that are
out there.
Mr. Cummings. I yield to the gentlelady, Mrs. Maloney, as
arranged, the remainder of my time.
Chairman Issa. The gentleman yields.
Mrs. Maloney. I thank the Ranking Member for yielding.
There is a meeting with the President on his women's
economic agenda today very shortly so a number of us will be
going to that meeting. This is an incredibly important hearing.
The Postal Service is so fundamental to this country.
I believe the mail should be delivered on time very day,
including Saturday. It is a critical part of our economy and a
critical part of peoples' lives.
The one area that I find completely troubling is the Postal
Service is required to make fixed annual payments, between $5.4
and $5.8 billion over ten years to pre-fund the cost of future
retiree health benefits for current employees and retirees. No
other agency in the whole government is required to do this.
This is incredibly unfair.
Not only do they have to and do they deliver mail to every
corner of this country, on time every day including Saturday,
they have to pre-fund their benefits. I just want to go on
record on how terribly unfair this is and that it needs to be
changed.
I will be reading the reviews and meeting with the Chairman
and Ranking Member on the outcome of this important hearing.
I yield back to the Ranking Member.
Chairman Issa. Are there any other women who will be
attending and have to leave? With the indulgence of the
Majority, you are now recognized.
Ms. Kelly. Thank you very much, Mr. Chairman.
Actually, with what my colleague just said, I can say,
ditto, ditto, ditto. I do think it should stay six days a week
and I do think we should relook at how pensions are paid. I
agree with the statement just made.
Thank you. I yield back.
Chairman Issa. Thank you.
Since I am getting a little indulgence from the Ranking
Member, could I have one minute to follow upon what the Ranking
Member said?
The Ranking Member talked about the proposal on banking.
Obviously it is not in the President's budget, but I wanted to
ask a question on consistency. If the State of Maryland, in
partnership with Maryland post offices in Baltimore and so on,
chose to have a government-sponsored partnership that accessed
those that would be, if I understand correctly, consistent with
the President's proposal, working with State and local
governments, if a government entity would have something and
utilize postal workers as part of their plan, that would be a
government to government plan and consistent with the
President's proposal, is that right?
Mr. Deese. The goal of expanding with say State and local
entities was to create space for those types of partnerships.
With respect to whether those partnerships go into the issue of
financial services or the issue of licensing or otherwise, we
are prescriptive on that in the proposal but the idea is to
focus on areas where you could find intersection.
Chairman Issa. If the Post Office was to run an
unemployment office, for example, an annex to an unemployment
office on behalf of the State, that would clearly be consistent
with the President's proposal because that would be inherently
governmental.
Mr. Deese. Those are the types of services that were
contemplated. Obviously with respect to the specifics, that is
the kind of business judgment we would want to leave to the
Postal Service.
Chairman Issa. I thank you.
We now go to the gentleman from Michigan, Mr. Walberg.
Mr. Walberg. I thank the Chairman.
Mr. Deese, thank you for being with us today.
The President's budget calls for codification of the Postal
Service's current plan to avoid closing many small rural post
offices like the one that services my home by reducing their
hours of operations to either two, four or six hours per day.
As part of the additional efforts to protect rural access
to postal services, the committee's bill includes an amendment
crafted by Representative Adrian Smith that would limit the
total number of rural post office closures to less than five
percent of the total number of remaining rural post offices per
year. The question I have is how strongly would the
Administration support this proposal?
Mr. Deese. I think you put your finger on a key part of the
Administration's proposal which is to actually codify in law
the Postal Service's post-plan they have developed. The
Administration believes that strategy is financially sensible
and supports one of the key principles we believe should be a
part of any plan which is to strengthen the Postal Service's
core assets. One of its core assets is its network including
its network in rural America.
The approach we would codify would seek to avoid post
office closures in rural areas altogether by implementing
alternative strategies, as you mentioned. We support that
effort and believe from a financial viability perspective, it
is not necessary or necessarily wise to go forward with
substantial closures in the future.
Mr. Walberg. In your written testimony, you state that
under the Administration's proposal, ``the Postal Service is
not being relieved of its retiree health care benefit
responsibilities or the requirement to pay its liabilities.''
This approach appears to implicitly reject a push by some of my
Democratic members and colleagues to ask the USPS to only 80
percent of the cost of these benefits.
Can you explain why the Administration believes that the
Postal Service should fully fund its retiree health care costs
and not only 80 percent?
Mr. Deese. I think this dovetails back to the points by
Congresswoman Maloney as well. We believe that the current
structure of fixed retiree health benefit payments is
unsustainable. At the same time, we think it is important, as
part of a comprehensive reform, to put the Postal Service in a
position where it is financially viable enough to meet its long
term obligations.
The approach we would take would be to restructure those
payments in the near term, basically defer the full payment in
2014 and half of the scheduled fixed payment in 2015 and 2016
but build those into a 40 year amortization schedule. When you
take that approach in the context of the other reforms in the
President's plan, we believe that 40 year amortization schedule
is sustainable for the Postal Service to meet.
Our view is that we want to try to put the Postal Service
in a position to meet its obligations over the long term but
that needs to be balanced against the realities in the short
term that without some near term relief, they will continue
defaulting on their obligations.
Mr. Walberg. Along with that, has the Administration taken
a position on the Postal Service's proposal that all postal
retirees be required to enroll in Medicare once they reach the
eligibility age for Medicare?
Mr. Deese. That is not a proposal on which we have taken a
formal position. The focus of our proposal with respect to
health care and health care liabilities has been trying to
address the financial viability issue that we just discussed.
That is a near term challenge because of the looming retiree
health benefit payments.
With respect to modifying the source of the health care
itself or modifying the benefit structure itself, that is not
something on which we have taken a position; it is something
that we know others have raised and we are looking at.
The one note I would make from the OMB perspective and from
the Administration-wide perspective is as we look at proposals
of that type, it is important to make an assessment on a whole
of government, unified basis in terms of the fiscal impact they
would have. We haven't taken a formal position but we are
looking at those closely.
Mr. Walberg. Thank you.
I yield back.
Chairman Issa. I thank the gentleman.
We now go to the gentleman from Vermont, Mr. Welch.
Mr. Welch. Thank you very much.
The most important thing is that at the end of the day, we
have to have a strong and vibrant Postal Service. The Postal
Service has been here longer than the United States
Constitution. There are enormous pressures on the Postal
Service now. Obviously the Internet has really cut into first
class mail but the telegraph cut into the Pony Express and a
lot of adjustment had to be made over the years.
Any approach that we take offered by the White House,
offered by this committee, should have as the goal the
strengthening of the Postal Service for the long term.
My view is that while there are enormous price pressures,
the recourse we have cannot be one that ultimately undercuts
the capacity of the Postal Service to provide the unique
service that it does. Six day delivery, in my view, is very
important. I am from a rural area. Folks in rural Vermont, all
over Vermont, really depend on that Saturday delivery. My hope
is that at the end of the day, we are going to maintain that
six day delivery.
One of the questions I have of you, Mr. Deese, is whether
the funding issue that some of my colleagues have brought up
where we have situations in government and some State
governments all around where sometimes pensions and medical
expenses are under funded and that creates a huge problem and
sometimes they are over funded and that creates a huge problem.
The cash flow for the Postal Service, where do you all
stand on the funding levels for these pensions and the
obligations that the Postal Service has that are constricting
their cash flow and their ability to operate?
Mr. Deese. I would say at the outset, the Administration
strongly agrees with your bottom line principle that we need to
be focused on a stronger Postal Service.
With respect to the pension and other outstanding
liabilities, it is important to look liability by liability
because it differs. With respect to the pension obligations in
the FERS system, for example, that is a place where we believe
that if calculated accurately based on postal specific
characteristics, there is a surplus and the Postal Service has
overpaid. Our proposal would rebate those resources.
Mr. Welch. That is great. So we would right size the
obligation, that would be actuarially sound but not bone
crushing for the cash flow of the Postal Service. That is the
goal, right?
Mr. Deese. Yes, that is right. I think that you have to
look at these pieces together because if a reform proposal
doesn't achieve sufficient near term financial relief, then it
is not going to allow time and space for reforms to take
effect, nor allow for the Congress and Administration to
actually solve this problem.
Mr. Welch. We have to maintain the overnight delivery
standards. One of the great things about any organization is
when they can provide the service that customers need.
Overnight delivery really is important to the Postal Service to
be customer friendly. Number two is missed time where there is
enormous pressure, loss of first class mail from the Internet,
there has to be some freedom to innovate.
The companies that do well are the ones that adapt. Where
is the Administration with respect to maintaining overnight
delivery standards and giving some flexibility and freedom to
the Postal Service to innovate and find other ways to generate
revenue to make that Postal Service strong?
Mr. Deese. With respect to the second piece on innovation,
we agree that it is important to provide additional flexibility
and authorities for the Postal Service to innovate and to
expand where they have identified promising new business lines,
for example, in the delivery of beer and wine.
With respect to the question of overnight delivery, we
believe it is important to maintain the quality of service that
customers have come to rely on and that has to be an integral
part of making any of these reforms.
Mr. Welch. Thank you very much, Mr. Deese.
Mr. Chairman, I yield back.
Chairman Issa. Would the gentleman yield?
Mr. Welch. I will yield, yes.
Chairman Issa. Thank you.
I think the gentleman from Vermont made a good point, but
earlier when the gentlelady from New York talked about pre-
funding, from the Administration's perspective, because your
proposal as I understand it is to essentially reschedule that
pre-funding but not eliminate it. Is that correct?
Mr. Deese. That is correct.
Chairman Issa. That is because ultimately, these expenses
come due and the revenue of selling stamps is where those
eventual bills are to be paid, is that correct?
Mr. Deese. It is important that the Postal Service is in a
financial position to meet those obligations because those are
obligations that their workforce is expecting.
Chairman Issa. Consistent with any other pension and
retirement program in the private sector?
Mr. Deese. Yes. On the question of pre-funding, obviously
to the degree that pre-funding is financially viable, it is a
wise financial decision. We have a situation in the short term
where the current law pre-funding obligations are untenable, so
the Administration's proposal is focused on the 40 year
amortization schedule that would make it more tenable.
Chairman Issa. Your proposal is based more on their ability
to pay today but still trying to eventually get them
actuarially sound, is that correct?
Mr. Deese. That is correct.
Chairman Issa. Thank you.
We will now go to the gentleman from Texas, Mr. Farenthold.
Mr. Farenthold. Thank you very much.
As chairman of the subcommittee, I want to talk about where
we agree and disagree and maybe do this on big picture items so
we know where to focus.
I assume you are familiar with the bill we passed out of
this committee and the reforms in it?
Mr. Deese. Yes, sir.
Mr. Farenthold. What parts do you specifically disagree
with that you think need additional work to be consistent with
what the Administration is after?
Mr. Deese. I think there are several provisions where there
are ideas or proposals that are not incorporated in the
Administration's plan. I think we have touched on a couple of
them. One is the treatment of the cluster box and curbside
delivery approach and the degree to which that is mandated into
the existing residential customer base or not.
I think there is a second question that has come up in this
conversation about the question of governance and the idea from
the Ranking Member's legislation of a Chief Innovation Officer
and whether and to what degree we need to create a new or
separate layer of oversight or governance in order to give the
Postal Service the flexibility to build on the ideas and
proposals that it has already committed to.
I think there are also some disagreements or areas where
the Administration proposal doesn't go in the space of
collective bargaining and workplace protections where it is the
Administration's view that if you look at what the Postal
Service management has been able to do constructively with its
workforce over the last couple of years, deploying creative
tools, finding savings that it is not necessary in the current
context to be prescriptive about future collective bargaining
agreements.
Those are a couple places I would note there are proposals
that are not included in the Administration's plan.
Mr. Farenthold. So we are generally in agreement. That does
kind of go through the big picture. We are generally in
agreement we don't want to close too many rural post offices if
we can avoid it.
Mr. Deese. Generally in agreement there.
Mr. Farenthold. Generally in agreement with revenue
enhancement. We can call it innovation or revenue enhancement
in such a way that does not give the Postal Service an unfair
competitive advantage over the private sector. I think your
proposal is doing more with respect to partnering the State and
local governments. We are in general agreement on that
principle?
Mr. Deese. Yes. The only thing I would note there, which we
believe is financially important, is extending the exigent rate
increase currently scheduled to expire which does generate
savings.
Mr. Farenthold. As far as the pre-funding, I think there
may be some details on exact actuarial formulas and numbers but
I think we can agree that if we can get the math to work, there
needs to be some form of pre-funding that is affordable today
but does meet the long term needs of the Post Office to keep
its commitments to its employees.
I like to tell postal workers who complain about this,
don't you want to be sure there is money there for your health
coverage.
Mr. Deese. I think finding that balance is certainly a
priority and one we tried to address in our bill.
Mr. Farenthold. I think we are actually more generous in a
modified six day than the President's proposal as far as days
of delivery?
Mr. Deese. With respect to the President's proposal, it
would provide the authority for the Postal Service.
Mr. Farenthold. To do nothing on Saturday if that was what
they wanted to do?
Mr. Deese. Our estimates there reflect what the Postal
Service has stated it would intend to do which includes
maintaining six day delivery for packages.
Mr. Farenthold. The other big stumbling block would be
cluster boxes. Our numbers show the modified six day cluster
boxes get as close to 70 percent of the way to balance. Our
proposal we would go to cluster boxes wherever possible and we
added, addressing some concerns of the Minority, continuing
home delivery for the elderly and disabled. We are looking at
the potential of if you want to pay the Post Office a
subscription fee, we will calculate what it cost to deliver to
a home. Say it is $100 a year. You can pay that and continue to
get that.
That seems to me to be a middle ground. Do you think that
is something you could take back to the Administration and say
where can we find some middle ground?
Mr. Deese. We are certainly happy to take back the proposal
you just put forward as well as the proposal the Chairman put
forward. Our concern there is not to destabilize existing
delivery. We are happy to look at it.
Mr. Farenthold. I think we are consistent with also not
wanting to reduce the size of the Postal Service workforce
beyond voluntary attrition as well, is that correct?
Mr. Deese. Our view is that the Postal Service management,
working with its workforce, has found constructive tools to
right size its workforce and that we should not be prescriptive
in that.
Mr. Farenthold. It looks like we are awful close on this. I
have gone over my time. I appreciate your testifying and look
forward to working with you.
I yield back.
Chairman Issa. The gentleman yields back what he does not
have.
We now go to the gentleman from Massachusetts, Mr. Lynch.
Mr. Lynch. Thank you, Mr. Chairman.
Mr. Deese, the decision of the Administration to move away
from six day delivery and go to five day delivery, you have to
acknowledge that we are going to stop service on a day when
most businesses in America and most families are operating on a
six or seven day schedule, so we are moving away from the
market. Do you get a sense of that at all?
Mr. Deese. I appreciate the question and understand this is
a challenging area. I think when the Administration has looked
at this issue, it has been in the context of the overall plan
and what we are doing on the revenue side of the equation as
well as what we are doing on the financial relief side of the
equation.
Mr. Lynch. Let us talk about the operational side of the
equation. If you are going to use less letter carriers, you are
not going to be delivering on Saturday, I assume that is the
day. That is pretty much what we have talked about here, going
from six to five. Regardless of what we do, the mail has to get
delivered, whatever mail is there. That is a physical
challenge.
We are going to have less letter carriers than we need to
deliver, especially if these other changes--cluster boxes and
going away from door-to-door delivery.
Have you thought about an early retirement incentive to get
letter carriers out the door? The letter carriers I am speaking
of specifically have not an offer of early retirement because
we need them. We cannot give the letter carriers an early
retirement up to now because that is the only way we get the
mail delivered.
I am thinking especially about the $12.5 billion that would
be a surplus from the over payment that these postal employees
made to their retirement system. There is $12.5 billion sitting
there. By my calculation, that would be less than $1 billion to
do a serious early retirement incentive for members of the
National Association of Letter Carriers and rural carriers as
well.
Mr. Deese. That is not a specific proposal we have looked
at but we would be happy to look more closely at it going
forward.
One note on this is it is important and we believe
consistent with what Congressman Welch raised about coming out
with a stronger Postal Service, that we also need to look at
places where there is expansion opportunity.
Mr. Lynch. Let us talk about that because that is my next
question. Right now we operate the Postal Service that goes to
every American business and home six days a week and we have
the census. The most expensive part of the United States Census
is the last portion where we send census workers out to every
American home separately and pursue the census.
I am just wondering if the Administration had thought about
using letter carriers who know these routes anyway to go to
these homes the other six days of the week, to use them to
actually take over that responsibility that the census is
paying for separately right now. Maybe we could even pull in
some of the retirees who also know these routes very
effectively and reduce our cost both of the census and the
Postal Service so we are saving money for the postal customer
and saving money for the taxpayer as well. Have you thought
about that?
Mr. Deese. That is a creative idea. It is not one that we
have looked closely at, but, again, one that we would be happy
to look at.
Mr. Lynch. Let me jump over to door delivery. You have
acknowledged, I think rightfully, that there are probably ways
we can more efficiently provide for delivery in rural areas
that might be amenable and suit for cluster box delivery. I
think that will happen.
Have you looked at the Chairman's bill, H.R. 2748?
Mr. Deese. Yes, sir.
Mr. Lynch. He suggests that by 2022, we are going to
convert over 75 percent of folks getting their mail delivered
at the door. That is 38 million people. He is suggesting that
30 million of those people by 2022 would go to a cluster box.
Looking at the demographics in this country, urban areas
will have to be converted. There is just not enough people in
the rural areas--that is why they call them urban, there are
lots of people there in places like south Boston, Dorchester,
and like Baltimore, Maryland where the houses are attached and
there is no place to put a cluster box.
I am wondering if you think that is realistic in terms of
trying to convert out of 38 million door delivery points that
we are going to convert 30 million of those to cluster boxes?
Chairman Issa. The gentleman's time has expired but you can
answer.
Mr. Deese. We do have a cluster box component to the
proposal, to the Administration's proposal. That is a place
where we do have concerns specifically about putting a hard
target or mandate on conversion rates.
As we discussed here, there are challenges where in some
geographic locations you can enhance service and save money
through these types of approaches. We are supportive of the
postal service looking for additional areas, but mandating that
on a broad scale could create unintended consequences which I
think we would like to avoid.
Mr. Lynch. I appreciate that and I yield back.
Thank you, Mr. Chairman.
Chairman Issa. I thank the gentleman.
We now go to the gentleman from Florida, Mr. Mica.
Mr. Mica. Thank you, Mr. Chairman.
Mr. Deese, it appears more and more that the funding of the
postal operations is turning into a big Ponzi scheme by not
paying bills that are coming due and not actually meeting our
obligations. That is unfortunate and I know you are trying to
correct that.
How are you keeping this afloat, I just asked that? They
said we are not pre-funding the health care, I guess some
retirement worker compensation pension, so it is all of the
above. We are not meeting our obligations on. Tell me the
losses. The current year, what is the projected loss?
Mr. Deese. The loss in the prior fiscal year, fiscal year
2013, the one we are in now, the projections are that the
Postal Service will not make the $5.6 billion scheduled
payment. I believe the net loss will be somewhat smaller than
that.
Mr. Mica. So $5 billion, last year was $5 billion?
Mr. Deese. About $5 billion.
Mr. Mica. In the budget you are presenting, what is your
projected loss?
Mr. Deese. In the Administration's plan, in the budget, by
restructuring those retiree health benefit payments, our goal
would be starting in fiscal year 2015 and going forward.
Mr. Mica. I agree with just about everything. I go for the
five day service. I saw your proposal. Let me ask, on the five
day service, we are having trouble getting votes from the other
side of the aisle and the other side of the Congress. Is the
Administration prepared to help on the five day issue? Are you
working it?
Mr. Deese. From the Administration's perspective, we were
discussing the issue of changing the delivery schedule.
Mr. Mica. Again, we are going to need support to pass this
stuff. When I look at all your points here, the biggest thing I
would disagree with is refunding over two years' projected
surplus of the Post Service Federal Retirement System. Talk
about a Ponzi scheme. I chaired Civil Service for four years,
probably the longest of any Republican and the first one in 40
years and I saw the way that was treated as a big cookie jar.
There is a projected surplus of about $500 million from
FERS last year but there is a deficit of $19.8 billion at CSRS,
right, a projected deficit, right?
Mr. Deese. Yes.
Mr. Mica. How can you balance something by taking money out
of a retirement account or try to use it as a balance to take
money out of an account that we need to keep every penny in
that we possibly can?
Mr. Deese. I think the challenge our proposal seeks to
address is that without sufficient near term financial relief--
--
Mr. Mica. You are taking money out of one account that
actually should be shored up. If I were a postal union member
or employee, I would be outraged. We need to get every penny we
can into CSRS because you are running almost a $20 billion
deficit there. This is again part of this Ponzi scheme.
You have to cut losses. Where is the biggest loss? They
said first class mail is down 25 percent, so that is continuing
to lose money. I thought most of the money that was lost was in
commercial mail, is that correct or incorrect?
Mr. Deese. The first class mail continues to be profitable.
The issue is declining volume.
Mr. Mica. I have been in business. I looked at where my
losses are and then I cut my losses. We may do it differently
in government, we steal out of this pot to fund to a fund
that's even more in hock. That is not the way it should happen.
The biggest loss is still in commercial mailing? They are
making money on packages and probably first class, right?
Mr. Deese. That is right.
Mr. Mica. You have to cut your losses in commercial, right?
Somebody is paying for this, it is a huge debt--or the
employees are paying for it. The employees are paying for it
because they are going to get screwed in the end. There is not
going to be money there and the taxpayer is going to get
screwed in the second year because somebody is going to have to
bail out the whole Ponzi scheme.
Mr. Deese. The Administration believes strongly that one
strong justification reform is avoiding liability that
ultimately gets shifted to taxpayers down the road.
Mr. Mica. We are willing to work with you. You need to work
with the Democrats, the House and the Senate. We need to do
this. We need to secure the postal system in the United States
of America. It is still very important.
You have thousands of people who have worked hard all their
lives, great, great people and we have an obligation to them,
not just to pay their salary but keep the system going and then
also to meet their retirement obligations and benefits that we
have incurred.
I am over. I yield back.
Chairman Issa. The gentleman's time has expired. I thank
him for yielding back.
We now go to the gentlelady from Illinois, Ms. Duckworth.
Ms. Duckworth. Thank you, Mr. Chairman.
I would like to yield one minute to Mr. Connolly from
Virginia.
Mr. Connolly. I thank my colleague from Illinois.
I just want to correct the record for my friend from
Florida. The idea that the problem is on the Democratic side of
the aisle with respect to supporting six day delivery is simply
not correct. I would point out that the Connolly-Graves
resolution, Mr. Graves being a Republican, H.R. Resolution 30,
has 210 co-sponsors, Republicans as well as Democrats, for the
record.
I thank my colleague and yield back to her.
Ms. Duckworth. Thank you.
Mr. Deese, thank you so much for being here. I do have a
couple of questions of clarification based on the discussions
we have had so far. Let's talk about the cluster boxes.
With new construction and new housing complexes being
built, you will be working with the developers to put these
cluster boxes throughout the neighborhoods, is that correct?
Mr. Deese. The Postal Service would be working with them.
Ms. Duckworth. We got 55 inches of snow in Illinois this
past winter. I still had two feet of snow on the ground when I
left my house in a shady area in my backyard. There was no way
that in my wheelchair I could possibly have made it to the
corner cluster box.
I just want to be sure the discussions we have had touched
on the fact that there would be exemptions. Is there an actual
move to make sure that is codified in some way, that persons
with disabilities would be exempt from the cluster boxes, even
in new developments?
Mr. Deese. The Administration believes that making sure
there are those types of accommodations in any proposal is
important.
Ms. Duckworth. Let's hope that it is more than just a
philosophy and we actually do follow through with that because
as I said, there is no way I could have made it through the
sidewalk under five feet of snow. It was taller than how tall
you are sitting there right now.
The other question I have has to do with the philosophy of
how we provide services. As you mentioned in your testimony,
you believe that any postal reform must build on rather than
undermine the Postal Service's core strengths. That is
something on which we definitely agree.
I would argue that the Postal Service's main core strength
is its reliability and the unique mission to serve the American
public regardless of profit considerations. Don't you think it
is counter intuitive to lower service standards or just going
to five day delivery at a time when the Post Office desperately
cannot afford to lose anymore business to competitors such as
to mail alternatives?
Mr. Deese. I think we share the goal of trying to build on
the core strengths including the trust the Postal Service has
developed with its customer base and the universal service
requirement which makes it unique as an institution.
The challenge that the Postal Service faces is that we have
a rapidly changing business environment. The rise of the
Internet and electronic communications changes the equation for
the Postal Service.
The Administration's plan, while building in the authority
to move toward five day delivery in some instances and some
segments, also looks for ways for the Postal Service to
leverage those core strengths to expand into areas where the
overall market segments are expanding and where the Postal
Service has an opportunity to strengthen its relationship with
its customers.
We are seeking to strike that balance along with giving the
Postal Service the near term financial relief and flexibility
that it needs so that it does not keep defaulting on its
obligations and we are not back here in a couple of years
because we haven't given it sufficient financial flexibility.
Ms. Duckworth. I also wanted to mention one other thing in
clarification based on the discussions we have had. That is
specifically the difference between the DOD retiree health care
program system and how that is funded in comparison to the
Postal Service.
Yes, Tri-Care for Life is a system that is pre-funded. It
is appropriated for. The other component of this is that DOD
retirees actually are paid from Medicare first and Tri-Care for
Life is a secondary payor. That is not the case with the U.S.
Postal Service retirees so there is a significant difference.
Do you have any estimates on what the cost savings would be
if the U.S. Postal Service were allowed to be the secondary
payor behind Medicare?
Mr. Deese. That is actually not something on which we have
done a cost estimate at the Office of Management and Budget. I
don't believe the Congressional Budget Office has either. It is
an important issue and an important question. I know that was a
component of a proposal that was introduced in the Senate. That
is an area that we are looking at currently.
Ms. Duckworth. Thank you. I am out of time.
I yield back, Mr. Chairman.
Mr. Mica. [Presiding] Pleased to yield to the gentleman
from Virginia, Mr. Connolly.
Mr. Connolly. Thank you, Mr. Chairman.
Again, I thank my friend from Illinois for yielding to me.
Welcome, Mr. Deese.
It is said that Wayne Gretsky used to say, I skate to where
the puck is going to be, not where it has been. One has the
sense in talking about these postal issues that Mr. Donahoe and
his management team are always skating to where the puck was.
For example, in looking at new business opportunities, let
us start with the Federal Government. There is an IG report
that shows that in 2011, the federal agencies spent $342.6
million in parcel delivery. Do you know what share of that
federal market the Postal Service had?
Mr. Deese. I do not.
Mr. Connolly. $1.2 million. The next year, they did a
little bit better, we spent $336.9 million as the Federal
Government, and the USPS share was $4.8 million, about 1.5
percent. Is there a growth opportunity, do you think?
Mr. Deese. It is not an area at which we have looked
closely but it does seem like on these types of spaces where
you are looking at governmental functions, the Postal Service
does have opportunities. Obviously, the question is how to
leverage the network and the competencies that the Postal
Service has.
It may be, in some cases, that is more challenging, but
certainly this is an area where we think the Postal Service has
more opportunity.
Mr. Connolly. Surely I think you would agree, given your
hat, OMB, this federal business is low hanging fruit?
Mr. Deese. We are absolutely in the business of looking for
ways to reduce cost and reduce duplication.
Mr. Connolly. The six day versus five day mail issue, as I
pointed out we now have 210 sponsors saying six days. That is 8
shy of an absolute majority here in the House. It is filled
with Republicans as well as Democrats, so good luck in trying
to persuade Democrats that we ought to accept the
Administration proposal.
I would like to know more about how you, OMB, the Executive
Branch, accepted this proposal? From your earlier testimony, it
sounded to me like you accepted whatever analysis there was
from USPS and simply incorporated it into your initiative, is
that correct? Did you do a separate analysis on the pros and
cons of going from six to five?
Mr. Deese. In the context of putting together a policy
proposal, the Administration looked at the policy impact of
that. With respect to the scoring assumptions that generated
the savings estimate in the President's budget, those scoring
assumptions are based on the plan or what the Postal Service
has indicated it would intend to do.
Mr. Connolly. Yes. You do understand that the Postal
Service has failed to provide us with any analysis proving that
as a matter of fact, outside of a static model, that this is a
slam dunk decision, that it is a net saver always?
Given the fact that, for example, parcel delivery, package
delivery, technology creates business as well as decreases
business. Yes, first class mail is declining but parcel
delivery is actually growing very robustly, you would agree?
Mr. Deese. That is right.
Mr. Connolly. Giving up six days a week may be giving up a
competitive advantage. Would you at least theoretically agree
that is possible?
Mr. Deese. Part of the Postal Service's plan would be to
continue package delivery.
Mr. Connolly. I am just citing parcels but there could be
lots of other things as well. By the way, has the Postal
Regulatory Commission looked at this new hybrid proposal, are
you aware?
Mr. Deese. I am not aware.
Mr. Connolly. Don't you think OMB might want the PRC to
look at it--that is their role--before you, in fact, embrace
it?
Mr. Deese. I think we are comfortable with the budget
proposal as we have put forward. Certainly as we go forward, we
would welcome input from various stakeholders.
Mr. Connolly. You are the Office of Management and Budget.
Have you done your own analysis to see whether there is a down
side to going to six days, that the Postal Service might risk a
whole line of business that drops because you are not
delivering? For example, the greeting card industry has said
that will happen to them. Have you looked at that to make sure
the net savings is what they say it is?
Mr. Deese. We have looked at this issue to try to
understand it. I think one of the important things about the
Administration's proposal is that it would----
Mr. Connolly. Mr. Deese, forgive me for interrupting but I
only have 17 seconds. Frankly, it does not look like you looked
at it all. It looks like you accepted the Postal Service at its
face value which is absent a PRC review. The last time they
looked at it was 2011 but that was a different proposal.
There is no analysis showing well, we are looking at a
static model, not a dynamic model in terms of potential growth
for the Postal Service and if we look at it in the context and
at least ask ourselves are we giving up a competitive
advantage, that question never got asked. It is just an
absolute, let us lock that off and call it net savings.
It troubles me to no end that this Administration has
accepted that at face value absent any analysis.
Mr. Deese. The one thing I would like to clarify is the
Administration's proposal would provide the Postal Service with
the authority to move to five day delivery in different
business segments, but as circumstances change, as there are
business opportunities, it does not mandate the conversion.
Mr. Connolly. That sounds good, Mr. Deese. I know my time
is up, Mr. Chairman, but we already have a Postmaster General
who tried to assert the fact he had legal authority when he
clearly did not and had to be reined in on this very subject by
his own postal governors because he asserted a legal authority
that most certainly did not exist and flew in the face of the
will of Congress.
It may or may not be a good public policy decision, but
Congress has written into appropriations bills thou shall have
six days a week. For the Postmaster General to defy that, which
he did, absent any legal authority, frankly saying its
authority is a nicety, but he has already clearly indicated he
will use that authority.
The fact of the matter is, were he to get it, were your
proposal to be adopted, we would go from six to five, is that
not the case?
Mr. Deese. In certain business segments, I believe that is
the case. In others, I think they would retain six days a week.
Mr. Connolly. Mr. Chairman, my time is up. Thank you for
your indulgence.
Mr. Mica. I thank the gentleman.
I am pleased the next gentleman I am about to recognize is
not from Connecticut. He is from the State next door. I would
recognize, Mr. Tierney.
Mr. Tierney. Mr. Deese, thank you for being here today.
In the fiscal year 2015 budget, the Postal Service
requested $162 million for services rendered but revenue
foregone but the President's budget request is only $70
million. Can you explain the discrepancy there?
Mr. Deese. I am sorry, can you clarify the question?
Mr. Tierney. The Postal Service asked for $162 million for
services rendered but revenue foregone. The President only
asked for $70 million. Why not ask for the $162 million?
Mr. Deese. I would have to get back to you on the specific
discrepancy. I know we are continuing to provide appropriated
funding for those purposes but I would have to get back to you
on the specifics.
Mr. Tierney. Would you do that, please.
Also, the Postal Service in the most recent quarterly
filing shows about $3.8 billion in unrestricted cash. Do you
consider that enough of a liquidity cushion for an agency this
size?
Mr. Deese. That cash position is not sufficient to meet
their current obligations including the retiree health benefit
payments, no.
Mr. Tierney. The Service also reached its $15 borrowing
limit permitted under law. Do you think they ought to be
extended additional borrowing power?
Mr. Deese. Our view is that they need near term financial
relief. We would not do it for additional borrowing authority,
but instead by restructuring the fixed payments which are not
tenable.
Mr. Tierney. The President's budget also has a request in
it for the Office of Personnel Management to return to the
Postal Service the surplus amount it paid into the FERS
account, correct?
Mr. Deese. Correct.
Mr. Tierney. The proposal also endorses the use of postal-
specific demographics to estimate the Postal Service FERS
liability. Why did you use the postal-specific demographics?
Mr. Deese. Given the size of the postal workforce and the
unique demographic characteristics, we believe it is
actuarially sound and appropriate to take into account those
specific factors when measuring the liabilities in this
instance that results in a surplus we would rebate back to the
Postal Service.
Mr. Tierney. The Administration's budget also proposes that
$5 million be returned to the Postal Service over the next two
years. Why two years instead of one?
Mr. Deese. It is part of the overall plan to try to provide
sufficient liquidity in the short term so that the Postal
Service can restructure. The retiree health benefit payment
adjustments happen over that same period, so our goal was to
provide sufficient liquidity over a multiyear period so that we
didn't end up with a situation where the Postal Service was
flush in one year and stuck in the next.
Mr. Tierney. Some of our colleagues have indicated a return
of the FERS surplus is to be termed a bailout. Do you agree or
disagree with that and why?
Mr. Deese. We don't agree with that assessment. The
calculation of the surplus based on postal-specific demographic
factors is actuarially sound. If you look across the spectrum
of the Postal Service's liabilities, there are places where
they are adequately or over funded and other places where they
are under funded.
Our approach seeks to address those in kind rather than
having a one size fits all approach.
Mr. Tierney. Thank you very much.
I yield back, Mr. Chairman.
Mr. Mica. Thank you.
We will start a second round and yield to members first who
may have additional questions.
First of all, when I left off, I talked about looking for
areas where our losses are, where we could save money. I don't
know if you have followed some of the things I have done. Most
people in the Administration don't.
Having come from a developer/private sector background, it
drives me crazy to see the Federal Government sitting on
valuable assets. It drives me crazy to see the Post Office
sitting on valuable assets.
I have not read all of the Administration's proposal about
some alternatives for offices and locations. I know the Senate
bill had a proposal that directed the Postal Service to examine
the potential expansion of retail alternatives to post offices
which have the potential to yield further operating savings.
I know they are selling off some of these vacant properties
or empty buildings. What brought this back to light on the post
office is I think it was last week I was home and I was asking
my property appraiser about surplus or vacant property in
central Florida and he showed me this list. Most of the vacant
property that he had was owned by the Postal Service.
Tell me, first again, what you have in your proposal, I
didn't see anything and secondly, where they should go and if
it isn't in there, why was it ignored?
Mr. Deese. To clarify, you are distinguishing between their
property versus the post offices themselves or are you
referencing both?
Mr. Mica. Both.
Mr. Deese. With respect to post offices, our proposal would
seek to codify the Postal Service's current plan which looks at
leveraging that network of physical locations by calibrating
hours and by looking for co-location strategies rather than by
down sizing the actual network itself. Our view is there are
opportunities there.
Mr. Mica. There are probably a thousand opportunities to
reconfigure based on the business. I come from the State of
Florida. Arizona and Texas, some of the growth States, we will
have needs in the future. There are also vacant properties all
over. I have worked on some of them and some of them take
years. The old post office downtown which went to GSA sat there
half of it vacant for 15 years, half of it empty. We finally
got that moving.
We are going from an $8 million loss to a $250,000 a year
guarantee for the government plus a percentage of property. I
can take you across my district and show you property that
needs to be disposed or better utilized. I can show you my
former district, St. Augustine, a huge building that Flagler
College has been begging to get it. They don't need it, it has
outlived its usefulness but there is nobody in the postal
system who can think, they lack creativity.
I would have hoped the Administration would have proposed
they at least get some professionals to help them do some of
these things that need to be done and it is not there, is it?
Mr. Deese. With respect to the Postal Service, outside of
the post offices and other vacant property, warehouses, they
have been looking at consolidation strategies.
We don't have a specific component in the President's plan
on that. I would say analogously though there is a proposal in
the President's budget to try to have a more aggressive
strategy to dispose of federal property generally speaking.
Mr. Mica. But again, the Post Office is probably one of the
biggest property owners in the United States. We have thousands
of properties. I am disappointed to see that you don't have a
specific proposal. I think working with the Congress, that
would be something--if we ever pass a bill--we should include
to give them the ability.
I am telling you, I have worked with the Post Office. I am
probably one of the few members in Congress who has ever gone
downtown and sat in the Postmaster General's office. When I
went down there, he almost flipped out; they had never seen one
before. He knew what I looked like, he knew descriptions of me
but I actually appeared there and we could get some things
done.
My point being they don't have the ability, the ingenuity
to put these packages together and move forward and maximize
the assets and cut the losses. Again, we have to look at where
the losses are, where you have assets sitting there and can be
turned into cash.
I took people up to Daytona Beach ten years ago and the
second floor of the post office was vacant in downtown Daytona
Beach for more than ten years--rent the thing. Again, I am
disappointed. There is still an opportunity for redemption.
In any event, we want you to work with us to look at how
this can be done. The Administration carries a big stick and
you can have positive things come from working with Congress.
Get these guys to vote for the five days and we will be set.
Do other members seek recognition?
Mr. Lynch. Yes. Thank you, Mr. Chairman.
Mr. Deese, I realize you have suffered enough but I have
one other question for you. The suggestion was made earlier
about the relationship between the surplus and FERS, the
Federal Employment Retirement System, which is an obligation of
the Federal Government and the prior CSRS, which is the
obligation of the prior Postal Service. I believe the
transition happened in late 1983 if I am not mistaken.
I want to clarify something. Those are different sets of
employees and different obligations, is that correct?
Mr. Deese. That is correct.
Mr. Lynch. The people who work under FERS, you cannot take
their pension money and pay it over to another group of
employees who worked under the postal department prior to 1983,
is that correct?
Mr. Deese. We certainly don't think that is a necessary or
appropriate step to take.
Mr. Lynch. I don't think it is possible. That is what I am
getting at.
Mr. Deese. They have that barrier as well.
The one note on the CSRS obligations is that under current
law, the Postal Service will begin making pre-funding payments
on a 25-year amortization schedule. The real challenge is to
put the Postal Service on a more sound financial footing rather
than to move resources into that space.
Mr. Lynch. That would happen under PIEA in 2017, is that
correct?
Mr. Deese. I believe it was 2018.
Mr. Lynch. You may be right. I may be off by a year.
PIEA does require them in 2017 to go back and look at their
real obligations. Right now, we basically have this $19 billion
hole that has been repeated for the past seven or eight years.
In 2017, with all of these CSRS employees passing away, a lot
of older employees, it is entirely likely in my estimate that
is CSRS obligation will be much smaller than we believe it to
be right now, is that your understanding?
Mr. Deese. I don't have particular visibility into the
actuarial dynamics in that pool. Obviously it is important to
update those actuarial estimates as time goes on and as we know
more about the demographic characteristics in those pools.
Mr. Lynch. I don't have anything further. Thank you very
much for your testimony.
Chairman Issa. [presiding] Thank you.
Let me go through sort of a closing. My Ranking Member has
had to step away and may come back.
The President's proposal is broadly consistent with many
Democrats, obviously, and many Republicans. It is the intention
of the Chair--and I have announced it to both sides--to embrace
to the greatest extent possible the entire portion of the
President's budget proposal.
I have serious concerns with mandating the exigent increase
be made permanent rather than allowing an entity that finally
took the initiative to recognize and codify it to continue
doing so. That does not mean I would totally oppose it; it
means that kind of look and say the process has worked, they
put that in, but sans that, the rest of the proposal I find to
be a good starting point for legislation that hopefully the
Administration would broadly push all parties to embrace.
As you heard today, you had a lot of people on both sides
of the dais talking about take-withs and take-backs. In
closing, what I would like to do is ask for a process, a short
process over the next two weeks and that is that members of
this committee would send a series of letters to OMB on various
aspects.
The Ranking Member, for example, had the question on other
enterprises and trying to define whether it is consistent with
the Administration's proposal. Ms. Duckworth brought up a very
good point which was the specifics of the disabled access if we
go to clusters. I would recommend that our staff send excerpts
from the earlier passed bill which specifically had some
language for access to disabled to see whether that is
consistent.
In using this dialogue, I don't want to artificially extend
the President's budget, but I want to make sure that each item
which is supported by the Administration and requested to be
considered by either side of the dais gets back a letter in
prompt fashion, a week or so whenever possible, so that after
the break, we could hold a markup and those comments would then
be available as part of our markup in support of specific
amendments or additions to the bill. Is that something you are
prepared to take back?
Mr. Deese. I am happy to take that back and work wherever
we can.
Chairman Issa. We introduced you as the Honorable, so the
question is, can you make it happen?
Mr. Deese. I am happy to take that back and we will work
diligently on any request from this committee.
Mr. Lynch. Mr. Chairman?
Chairman Issa. Yes.
Mr. Lynch. I just want to be clear that there are some
members on our side of the aisle and I suspect there may be
members on your side of the aisle nevertheless that disagree
with both you and the President, so we would want to be a part
of that dialogue as well.
Chairman Issa. Reclaiming my time, that is the reason for
this closing statement. The Ranking Member and I agree on some
things and we disagree on some things. The Ranking Member has
some additional initiatives and also Ms. Duckworth. The
questions related to the pre-funding versus FERS recapture, I
know some of my folks are going to further ask it.
My goal is to only include in the markup, at least my vote
would be to only include things in the markup in which the
Administration has commented consistent with their view of the
budget proposal.
In other words, if something were to hurt the Postal
Service's ability to survive, they would likely respond they
couldn't support it in light of the budget. It doesn't mean
they wouldn't necessarily like it, it just means that this is a
proposal to pass a bill as part of the budget process that
would support postal reform consistent with the President's
budget proposal.
In a sense, Mr. Lynch, what I am saying is if there are
additional efficiencies, additional revenues or necessary
changes such as Ms. Duckworth's, the whole question of the
civil rights of the disabled, I want to make sure those are
considered but my goal is to pass a net cost reduction piece of
legislation out of this committee to help ensure the survival
of the Postal Service.
I will say on the record that I recognize and support the
Administration's view that we need to find breathing room,
dollars for these reforms to take hold which means that we do
have to look at CSRS as a delayed recapture even though they
are perhaps $20 billion in arrears.
We do have to look at the FERS windfall--I shouldn't say
windfall, but the excess payment that can be a windfall to the
Post Office, as revenue they can use as part of the conversion
because I think the Administration has said very clearly they
think the fiscally responsible thing to do is to give them
breathing room while also mandating that they make reforms that
have been tough to make, tough for both parties.
Do you have any further closing guidance?
Mr. Lynch. I think what we are hitting on is that there are
some things in your proposal and the President's proposal that
I view and see as things that are indeed harmful to survival of
the Post Office.
Chairman Issa. I look forward to working with the gentleman
on that. I think one thing you made very clear is the attrition
rate and the incentives would hopefully be something on which
we would come to an understanding with the Administration and
needs to be in place, the ability to reduce the size of the
workforce through voluntary programs should be part of any
package to be sent forward. I think you made that point but I
am sure there will be others.
Mr. Deese, I want to thank you for being here for this
short hearing. By this committee's standards, this was quick
but you were very helpful in your answers and your willingness
to take back and receive over the next week a series of letters
and, if at all possible, to respond to them over the next two
weeks so that when we come back from the Easter district work
period, we can proceed with a markup consistent with the
President's budget which is the intent of the committee.
Mr. Deese. Thank you.
Chairman Issa. Thank you.
We stand adjourned.
[Whereupon, at 11:48 a.m., the committee was adjourned.]